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Macy's/Martha Stewart trial begins

New York - Macy's lawsuit against Martha Stewart Living Omnimedia was due to get underway this morning in the New York State Supreme Court here, just three months before some Martha Stewart-branded product is set to roll out at JCPenney.
Macy's claims the JCPenney deal violates its exclusive contract with Stewart in a variety of categories, bedding and bath among them. Omnimedia has defended the JCP deal by saying its Macy's contract allows it to sell Stewart merchandise on the Internet, on television and in Stewart-branded stores.
A Martha Stewart store-in-store was to be the anchor of JCP's remodeled home department, and JCP was originally slated to help Stewart develop on online retail operation.
According to Bloomberg News, Macy's lawyers filed a pre-trail memorandum that stated: "Macy's contracted with MSLO at a time when the MSLO brand was associated with the significantly downscale Kmart and Ms. Stewart was just being released from prison...Taking losses at first, Macy's moved the brand in soft home goods upscale, a herculean task under the circumstances. Now defendants, in complete disregard of the Macy's agreement, seek to reap the rewards of Macy's work and to usurp the benefits of Macy's contract."
Omnimedia has accused Macy's of breach of contract and pricing Stewart products at a tier that makes Macy's private label products the more attractive buy, Bloomberg reported.

Last fall, the judge in the case barred JCP from carrying the Stewart brand on merchandise categories currently carried by Macy's. Earlier this month, the Dallas Morning News reported the first wave of products carrying Stewart's name at JCP - which is set to arrive by May 12 - will include rugs, window coverings and two new lines, Martha Stewart Pantry, a collection of food mixes, and Martha Stewart Celebration, a selection of paper party products.

Yesterday, the New York Post reported that while the Stewart team collaborated on design for about half of the JCP's new home department goods, only 10% will carry the brand name due to the Macy's suit.

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